State banks, which were the traditional lenders in the call money market, have now become the biggest borrowers due to growing financing to the government.

According to Bangladesh Bank data, Tk 6,237.50 crore was traded in the inter-bank call money market yesterday at 12-15 percent interest rates.

Of the total amount, Tk 2,240 crore was borrowed by four state banks -- Agrani, Janata, Sonali and BASIC.

Sixteen private commercial banks (PCBs) borrowed Tk 3,187 crore and 14 non-bank financial institutions (NBFIs) Tk 651.50 crore.

Of the PCBs, Prime Bank borrowed the highest amount, Tk 476 crore, followed by Mercantile Bank Tk 400 crore, National Bank Tk 284 crore and Eastern Bank Tk 275 crore.

“Although the call money rate tends to be high it is still at a tolerable level,” said Helal Ahmed Chowdhury, managing director of Pubali Bank, a big lender in the overnight money market.

Pubali yesterday lent Tk 496 crore, the second highest after Dutch-Bangla Tk 1,440 crore, HSBC Tk 1,216 crore, Trust Bank Tk 765 crore and Citibank NA Tk 676 crore.

Of the NBFIs, Delta Brac Housing was the top lender in the market with Tk 88 crore.

Unlike previous years, the inter-bank call money market looks less volatile ahead of this year's Eid-ul-Fitr festival.

Although cash withdrawal from banks has been increasing for the past two weeks, the call money rate did not rise proportionately due to the central bank's prudent role, treasury officials said.

The central bank yesterday injected fresh funds worth over Tk 14,000 crore through auction of repurchase agreement (repo) and special liquidity support to the primary dealer banks.

“State-owned banks are the net borrowers in the market as our funds are stuck in government instruments and with the petroleum corporation for financing fuel imports,” said a senior treasury official of Sonali Bank, the largest bank in the country in terms assets and network.

The Daily Star/Bangladesh/  13th Aug 2012

Merchant banks are different from traditional non-bank financial institutions, the central bank said, putting an end to confusion over the status of such banks.

Bangladesh Bank in a letter to the Securities and Exchange Commission on July 24 said the merchant banks are registered under the SEC Act, 1993.

The BB letter said, as the merchant banks do not take deposit from clients, Financial Institution Act, 1993 will not be applicable to merchant banks. The act is applicable to traditional NBFIs.

The letter also said the merchant banks will not need to take licences from the central bank, and will be regulated by the SEC, the stockmarket regulator.

Earlier, the central bank in a letter to the SEC on June 6 said the merchant banks are considered NBFIs as per Section 2(b) of Financial Institution Act, 1993. A clause of the act included merchant banks, among others, in the category of financial institutions.

The stockmarket regulator on May 20 sought the central bank's opinion about the status of the merchant banks, after the National Board of Revenue (NBR) put the merchant banks in the NBFI category.

The finance minister in his budget speech had also branded the merchant banks as NBFIs, and proposed a cut in their income tax from 42.5 percent to 37.5 percent, deepening the confusion over the status of such banks.

Later, the merchant bankers had said they are involved in stockmarket activities, not in the financial sector.

The merchant banks provide a number of financial services, ranging from underwriting shares to lending to stock investors. Due to their multi-faceted roles as financial institutions, they are not classified in the same bracket as 'banks and non-bank financial institutions'.

Presently, there are 52 merchant banks of which 43 are full-fledged. The full-fledged merchant banks' functions include underwriting, issue management, portfolio management and lending to stock investors.

The Daily Star/Bangladesh/  13th Aug 2012

Earnings of listed commercial banks showed a mixed trend in the first six months this year with half of the banks posting growth in net profit.

Net profit of the remaining banks declined during January-June, compared to the same period last year, according to the banks' half-yearly disclosures made public recently.

The growth in the earnings was mainly from core banking business, which got a momentum after the liquidity crisis has been eased this year, especially in the second quarter, bankers said.

Commission from LC (letter of credit) opening and remittances, strong monetary recovery and integrated treasury management also helped 14 banks earn higher amount this year, they said.

However, they said many banks could not achieve the target of profit margin due to loan provisioning for non-performing loans and a sluggish stockmarket.

Of the 30 listed banks on the stockmarket, 15 posted a decline in net profit.

Banks had a severe liquidity crisis a year ago, but now there is no such crisis, said Mohammed Haider Ali Miah, managing director of EXIM Bank.

The bank's net profit jumped by 82 percent during the period, the highest among all banks.

In the first six months this year, the bank's net profit was Tk 92.99 crore against Tk 51.09 crore in the same period last year.

“The banks with more export-import related business made higher profits this year,” he said.

“Besides, we focused on strong monetary recovery system, and an integrated treasury management helped us make the highest profit,” he said.

Helal Ahmed Chowdhury, managing director of Pubali Bank, said the banks that had to keep aside lesser amount of money for loan provisioning posted more profit.

“The banks with higher non-performing loans made lesser profit,” he said.

He also said there was a time when the banks made hefty profits from the stockmarket, but now the situation is different.

“The sluggish stockmarket also forced many banks to go for provisioning,” he added.

EXIM Bank apart, Standard Bank, Shahjalal Islami Bank, SIBL, MTBL, Jamuna Bank, Islami Bank, Mercantile Bank, Al-Arafah Islami Bank, DBBL, Rupali Bank, BRAC Bank, First Security Islami Bank and Pubali Bank registered an increase in net profit between 3.72 percent and 52.83 percent.

The banks that saw a decline in their net profit are Dhaka Bank, IFIC Bank, Premier Bank, National Bank, One Bank, UCBL, Bank Asia, NCC Bank, City Bank, AB Bank, Prime Bank, Eastern Bank, Southeast Bank, Trust Bank and Uttara Bank.

The banks' income mainly comes from two areas -- core banking and capital market investment.

“As the present scenario of the capital market is not good, almost all the banks incurred losses from stock investment,” said Fazlur Rahman, managing director of AB Bank.

Many of them also had to go for loan provisioning due to stockmarket investment, he said.

Although the core banking business was good, it was not enough to offset the losses.

ICB Islami Bank's accumulated loss came down to Tk 8.41 crore in the first half this year, which was Tk 91.32 crore in the same period last year.

The Daily Star/Bangladesh/  13th Aug 2012

A two-day long workshop on ''Credit appraisal system and Green Banking'' organised by Bank Asia Limited concluded in the city recently. A Rouf Chowdhury, Chairman of the Bank, handed over certificates among the participants, said a press release.

Md Mehmood Husain, President and Managing Director, Aminul Islam, S M Khorshed Alam, Mohammed Roshangir, Humaira Azam, were present.

The Daily Sun/Bangladesh/  8th Aug 2012

Ahmed Shafi Chowdhury, Director and Chairman of audit committee, Board of Directors of PBL, inaugurates its newly-shifted branch at new premises in Gobindagonj.

Pubali Bank Limited (PBL) recently shifted its Gobindagonj branch at new premises in Gobindagonj aimed to provide best and modern banking services to its customers.

Ahmed Shafi Chowdhury, Director and Chairman of audit committee, Board of Directors of the Bank, inaugurated the newly-sifted branch as the chief guest, said a press release.

Helal Ahmed Chowdhury, Managing Director and CEO of the Bank, presided over the inaugural ceremony.

Mohammad Ali, Chief Technical Officer and General Manager, Abul Kalam Azad, Upazila Chairman of Gobindagonj Upozila, Abu Taher Chowdhury, Regional Manager of the bank’s Rangpur Region and Deputy General Manager of the Bank, businessmen and local elite were present.

The Daily Sun/Bangladesh/  8th Aug 2012